The men, who have not been named, were arrested in Guernsey this week. They have since been released on bail pending further inquiries, according to local media reports.
According to local newspaper Jersey Evening Post, a local law enforcement spokesman said: “The arrests were undertaken at four separate addresses in the island, in connection with suspected offences of fraud by abuse of position and in response of the provision of false or misleading, or recklessly furnishing information relating to the protection of investors.
“Due to the ongoing nature of this investigation, we are unable to give any further details at this time.”
Investors in the fund were told in January that they were unlikely to get their money back.
The Providence Fund and its manager, Providence Investment Management International Limited (Pimil), were put into administration in August 2016 following an application by the Guernsey Financial Services Commission (GFSC).
The decision was taken after all of the directors from both companies resigned in early August, having informed investors that the fund had been suspended on 29 July.
Deloitte was appointed administrators and found, as part of its review, that the Providence parent company was insolvent. As a result, joint liquidators were appointed to Providence Global on 22 August.
A criminal investigation into Providence was launched on Guernsey in October 2016.
Providence Global also owns Brazilian factoring company, Providence Fomento Mercantil, Investimentos e Participações into which the Providence Fund invested.
The closed-ended absolute return fund aimed to provide investors with annual returns of between 7% and 14.25% from investments in Brazilian debt, specifically the factoring of receivables (the purchase of debt) of small and medium-sized businesses.
The fund lent money to the factoring company based in São Paulo for between 30 and 180 days. The short-term debt was purchased at a discount of more than 2% per month with the returns collected at par.
The minimum investment was $50,000, €37,500, or £30,000.
Jersey’s financial services regulator has launched its own investigation into the sale of Providence Investment Funds to clients of Jersey-based IFA firm Lumiere Wealth, which is majority owned by Providence Global.
Lumiere Wealth was ordered to be wound up by the Royal Court of Jersey on 4 October. The firm’s founder and managing director, Chris Byrne, was arrested in connection with the firm’s ties three days later.
Byrne is still waiting to stand trial.